Nov 092012

By Renee D. for

The internet has of course been around for decades now, but services like online bill pay are fairly recent. Also known as “electronic bill payments” or “e-bill payments”, online bill pay is a unique service that most banks, credit unions, and specialty companies offer consumers for both business and personal need.

What is an Online Payment Service?

As the name implies, this service makes it possible for you to pay your bills via the internet as opposed to mailing them in through the post. The exact methods of pay would depend on the exact company or financial institution.

Online bill pay

Online bill pay has grown in the last few years.

For instance, some bill pay systems are set up so money would be deducted directly from your checking or savings account with a bank or credit union. Alternatively, payment could be made using a credit card or debit card. In fact, there are some services that accept both forms of payment.

Components of Bill Pay Services

Along with different methods to pay bills online are system features that vary for each business or financial institution. However, every bill pay service offers many of the same features, such as:

Delivery – Due to consumer demand, most payments are sent in real time. On the other hand, there are some payments that are processed as part of a batch. With this, payments from multiple customers would be sent together but to different creditors.

Fees – Although it is common practice for fees to be charged when sending money via a transfer or bill pay system, the amount varies from one company or financial institution to another. Because the fees charged can be significant, you should familiarize yourself with the fee structure prior to using any service for paying bills online.

Retail or Peer-to-Peer Payments – While most of the better known payment services accommodate payments of all types, there are some that only process payments to retailers and peers, which would include online retailers like,, and, among others.

The EBP System – Electronic Billing and Payment

The National Automated Clearing House Association’s electronic billing system was created by The Council for Electronic Billing and Payment (EBP). This model made it possible for specific billing applications to be implemented and payments to be submitted by customers. Once approved and launched, EBP systems provided the ability to pay bills over the phone but also via the internet. As part of this new system, customers were also given the opportunity to access financial and billing information.

Any good online bill pay service will offer efficient customer support by telephone and email to help customers facilitate payments, get answers to important questions, or raise concerns. There are other benefits to paying bills online. For instance, making payments is easier and more convenient but also less expensive since the need for stamps is eliminated. Online bill pay is also environmentally friendly since fewer trees are cut down to produce paper.

Between banks, credit unions, and special bill pay companies, different types of systems are used. However, the two most common systems include the following:

Bank Aggregator – With this model, payments are made at an aggregator or consolidator site. In most cases, the payments are facilitated by the individual’s own bank via website. The greatest benefit to this option is the ability to pay several creditors at once that are already registered and approved to receive payments.

Biller Direct – This second model allows an individual to make payments through just one biller. With this, the bill pay service could accommodate bills issued from a creditor that are sent to the creditor’s website. For instance, an electric or gas bill would authorize the bill pay company or financial institution to be a third-party through which a person could make the payment.

Team Approach

While it might seem that paying bills online is a process that involves only the debtor and bill pay facilitator, in reality there are several parties involved. For instance, bankers, billers, consolidators, and aggregators also play a key role in bills being paid online. Obviously, the exact parties involved depends on the service but also the consumer’s specific need. Some of the primary players in online payment services include:

Biller Payment Provider or BPP – This is a biller’s agent through which remittance information would be received on behalf of the actual biller

Biller Service Provider or BSP – Also a biller’s agent, the focus for this is not on the customer but instead on the biller

Consolidator – A consolidator is a biller service provider responsible for consolidating bills from more than one biller. In addition, the consolidator would consolidate other Bill Service Providers, which would then be presented to a Customer Service Provider or CSP.

Customer Service Provider or CSP – As the title implies, this is a customer support professional that provides answers and assistance to individuals and businesses but other presenters of bills as well. As part of the CSP’s job, customer would receive assistance with enrollment, given approval to present bills, and provided ongoing support for issues or concerns that might arise.

%d bloggers like this: